Delaware Department of JusticeAttorney General
Matt Denn

Fraud & Consumer Protection Division

Ombudsperson Alternative Dispute Resolution

Introduction

A central duty of the Office of the Common Interest Community Ombudsperson is providing “alternative dispute resolution,” or “ADR.” The “alternative” to ADR is a lawsuit in court. The Ombudsperson Act gives the Ombudsperson the “power and duty” “To provide meetings, mediation or other forms of alternative dispute resolution as may from time to time be requested by” members of the common interest community. In addition, following a review of a complaint that has been through an association’s “internal dispute resolution” process, the Ombudsperson may offer ADR in an appropriate case. In either case, the Office of the Ombudsperson cannot force parties into ADR. All ADR through the Office of the Ombudsperson is voluntary.

The Office of the Ombudsperson can either facilitate or conduct ADR. The Ombudsperson can facilitate ADR by accepting the complaint and forwarding it to the opposing party, and help the parties agree on neutral ADR practitioner if either party objects to the Ombudsperson.

To request ADR through the Office of the Ombudsperson, please complete and submit the Ombudsperson’s Contact/Complaint Form with a $35 check payable to the Delaware Department of Justice, Office of the CIC Ombudsperson. Additional fees apply whether the Office of the Ombudsperson or another ADR practitioner provides ADR services. The fee for the Ombudsperson’s time is $100 per hour, and is charged for travel time as well as ADR services. The fee is equally divided among the parties, unless the parties make a different agreement.

Advantages of ADR

Lawsuits are expensive, take a long time, will probably involve the additional expense of attorney’s fees, and put the decision concerning how to resolve a dispute in the hands of an uninvolved third-party, like a judge or jury. Although ADR is available in some courts, it is usually not available until a party files a complaint. By that time attorneys are usually involved, since in courts (other than Justices of the Peace Courts ) an attorney must represent a corporation such as a homeowners association. Bylaws of most home owners associations require a complaining homeowner to pay the association’s attorneys fees. Even if the homeowner wins, the association’s attorney’s fees are a cost the association must pay from the assessments that all homeowners in the community must pay, unless the association’s insurance covers the fees as a cost of defense.

The Ombudsperson Act, does not affect the right to file a lawsuit under §348 of Title 10. That statute authorizes Chancery Court to order a Master in Chancery to mediate a complaint seeking enforcement of deed restrictions. Although the parties may mediate without attorneys, the association board will have to have an attorney since it is likely a corporation. This increases the expense compared to informal ADR. Moreover, the statute allows the Court to order the losing party to pay the attorneys fees of the party that wins, unless that would be unfair, unreasonable or harsh. This raises the stakes in lawsuits over deed restrictions. A copy of this law is available on the Ombudsperson’s website.

Major advantages of alternative dispute resolution include:

The parties can work out their own solution to issues in some forms of ADR such as conciliation, meet and confer, or mediation;

ADR can be conducted informally, without resort to courts or even attorneys;

ADR can be far faster and less expensive than traditional court procedures;

All ADR is voluntary. Both sides of the dispute must agree to participate in ADR.

The information discussed during any ADR process remains confidential, by agreement or by law, even if there is litigation after unsuccessful ADR.

A trained ADR practitioner conducts sessions: a conciliator, or a mediator or an arbitrator, who attempts to fairly resolve the dispute and satisfy the needs of the participants.

All participants have an opportunity to express their feelings about the case and the facts as they see them.

ADR offers the parties a safe place for reviewing options and enables them to develop their own settlement terms in a mutually agreed format.

The parties can agree on an ADR Practitioner, or they can seek help with the selection.

What Forms of ADR Are Available Through the Ombudsperson?

The Ombudsperson or a designee can provide the following types of ADR. These are discussed below in order of increasing complexity.

1. CONCILIATION

“Conciliation” is a process in which an experienced, neutral person or “conciliator” meets with the parties to a dispute, often separately, to informally discuss and negotiate a complaint informally. The conciliator may make suggestions as the parties consider how to resolve a dispute, as well as their own. An association board, by rule or bylaw, should make this process available to resolve disputes internally. The Office of the Ombudsperson can either coordinate or provide conciliation upon request. To request conciliation through the Office of the Ombudsperson, please complete the Ombudsperson’s Contact Complaint Form and the Agreement for Conciliation form available on this website.

The conciliator cannot impose a decision or any penalty on the parties.

Conciliation is the simplest, fastest, and least expensive form of dispute resolution.

The parties find their own resolution to a dispute, with or without the assistance of the conciliator.

“Meet and Confer” is another type of conciliation, without the guidance of a neutral person. With or without a neutral conciliator, conciliation follows this process:

Any party to a dispute involving a homeowner, the homeowners association, the declarant, or other interested party, may request conciliation:
(1) A party may request the other party to meet and confer, with or without a neutral conciliator, in an effort to resolve the dispute. The request must be in writing. An Agreement for Conciliation or Mediation is available on this website.
(2) A homeowner may refuse a request to meet and confer. The association may not refuse a homeowner’s request to meet and confer.
(3) The homeowner’s association board must promptly designate a director to meet and confer.
(4) The parties must meet promptly at a mutually convenient time and place, explain their positions to each other, and confer in good faith in an effort to resolve the dispute.
(5) The parties must put any agreement resolving the dispute in writing and sign it. The board’s authorized designee must sign the agreement on behalf of the association.

An agreement made through conciliation binds the parties and is judicially enforceable as a contract if both of the following conditions are satisfied:
(1) The agreement is not in conflict with law or the governing documents of the common interest development or association.
(2) The agreement is either consistent with the authority granted by the board to its designee or the agreement is ratified by the board.

An Association may not charge a homeowner a fee to participate in the process.

2. MEDIATION

“Mediation” is the most common method presently used for resolving disputes. Mediation offers the parties a safe forum for reviewing options and enables the parties to develop their own settlement terms by a mutual agreement. Mediation is a process in which a neutral person called a “mediator” aids the parties in reaching agreement on how to resolve a dispute. To request mediation through the Office of the Ombudsperson, please complete the Ombudsperson’s Contact/Complaint Form and the Agreement to Mediate form available on this website.

The mediator cannot impose a decision or any penalty on the parties.

The mediator’s role is to clarify misunderstandings and ambiguities; to provide a new perspective on disputed issues; and to explore options for mutual agreement.

Mediation through the Office of the Ombudsperson is voluntary. The parties must agree to mediation and must be present for the mediation conference.

Mediation is beneficial to both parties because of the time and money saved compared to a lawsuit or trial.

Before the mediation begins, the parties and the mediator sign a written Agreement to Mediate. A form Agreement to Mediate is available on this website. The Agreement to Mediate states that the mediation conference and everything said at the mediation conference is confidential, even if the mediation does not resolve the dispute. It states that neither party can call the mediator as a witness if the case goes to arbitration or trial.

Mediation conferences are informal proceedings. That means that the strict legal rules of evidence do not apply in mediation. This allows for an unrestricted discussion of issues and misunderstandings. If the parties reach a settlement, the mediator puts the settlement agreement in writing and all the parties and the mediator sign it. The agreement describes both the settlement of issues and the future responsibilities of each party. Once signed the agreement is a binding contract, which is enforceable by courts.

If the dispute is not resolved at the mediation conference, the mediator will continue to work with the parties to reach an agreement. Mediation includes all contacts between the mediator and any party, until the parties reach an agreement, or the parties discharge the mediator, or the mediator determines that the parties cannot agree. The context can include telephone conversations, meetings and even additional mediation conferences.

The mediator may terminate the conference if the parties are unable to agree. The termination will not bind either party to anything in any other proceeding. If the parties do not reach an agreement after initial mediation sessions, other ADR procedures or more formal processes are available. These include arbitration or filing suit and proceeding with litigation.

The process of mediation often involves the following:

The complaining party fills out a Contact/Complaint form requesting mediation and files it with the Ombudsperson, and delivers a copy to the responding party with a copy of an Agreement to Mediate.

The responding party may supply answering information, provide it to the Ombudsperson, and delivers a copy to the responding party.

The parties must agree to mediation by signing a written agreement form.

The Agreement to Mediate may identify any mediator the parties agree upon, or the Ombudsperson, who may conduct the mediation or designate a mediator.

If the parties do not agree to a mediator, the Ombudsperson will appoint one.

The mediator will specify a date and time for the mediation that is convenient to both parties.

Five days before the mediation date, both the complaining party and responding party will submit pertinent records the mediator will need to understand in order to assist the parties to reach agreement. The parties need not provide their information to the opposing party, but some mediators recommend that the parties give it to each other, in some cases. Since the mediator will not decide the case, the parties do not need to provide everything they would produce at a trial, or duplicate documentation provided with the Contact/Complaint form.

The Required Information is the complaint form, with an explanation and identification of the pertinent parts of the pertinent governing documents of the homeowners association, from the certificate of incorporation, declarations, the bylaws, and any rules adopted by the homeowners association. In addition, each party can provide a few items of evidence or documents that would be useful for the mediator to consider, in assisting the parties to reach agreement. Sometimes the mediator will ask each side to fill out a form that helps the parties think through the strengths and weaknesses of their position, and the agreements they seek.

The parties may agree on what documentation the mediator will see and provide it together, or may share the information they are providing with the other party. This is not required.

On the day and time of the mediation the parties will meet with the mediator in a conference room.

The mediator will explain the mediation process and require each party to sign an Agreement to Mediate the dispute and agree that neither side will call the mediator as a witness in any other proceeding concerning the dispute.

The mediator will invite the complaining party to describe the dispute or complaint and explain what the party wants in order to resolve the dispute.

The mediator will then invite the responding party to state a response to the complaining party and tell the mediator what he wants in order to resolve the dispute.

The mediator may then separate the parties, so that each is in a separate room in order to speak privately with each.

The mediator will make a judgment about what party to speak with first.

The mediator may ask questions of the each party, and will ask what they want the mediator to convey to the opposing party as a settlement proposal.

The mediator will not tell the other side anything that you tell him not to disclose.

The mediator will take messages back and forth between the rooms separating the parties and discuss the settlement proposal and the response to it. The mediator will attempt to identify areas of agreement and areas of dispute and possible ways for reaching agreement.

The mediator will continue this process as long as it appears there is room to reach a settlement.

If the parties reach an impasse the mediator will end the mediation conference for the day. The mediator will likely contact the parties later to seek and offer to convey additional proposals in an effort to obtain agreement that will resolve the dispute.

When the parties reach an agreement, the mediator will assist by reducing the agreement to writing. The mediator may follow up with each party to see that each side is honoring the agreement, if that is necessary.

3. ARBITRATION

“Arbitration” is a voluntary, confidential process in which a neutral “arbitrator” hears both sides of a controversy and decides all aspect of the case based on the facts and the law just like a judge without a jury. The parties may agree in writing that the decision will be binding, and enforceable. To request arbitration by or through the Office of the Ombudsperson, please complete and submit the Ombudsperson’s Contact/Complaint Form and the Agreement to Arbitrate form available on this website.

Arbitration is often beneficial to both parties because of the time and money saved compared to a lawsuit or trial.

The arbitrator will make a decision for the parties. This differs from mediation where the parties negotiate their own result. As in cases decided in courts, arbitration often means that at least one party is unhappy with the decision.

The arbitrator’s role is to hear the evidence, including testimony, and review the documents and exhibits. The Arbitrator decides: what facts are the important; what law applies to the facts; and applies the law to the facts to reach a decision. The parties do not negotiate their own resolution, but if they agree on certain facts or principles, the arbitrator will consider those.

The parties can agree in writing that the decision will be binding. If the decision is binding the parties are bound to follow the arbitrator’s decision. The Court of Chancery can enforce a binding arbitration order.

Arbitration through the office of the Ombudsperson is voluntary. The parties must agree to arbitration, and if they do, they must be present for the arbitration hearing. However, sometimes an agreement made before there is a dispute requires the parties to arbitrate instead of filing a lawsuit. The bylaws of some communities require arbitration before a person can file suit.

Delaware’s Uniform Arbitration Act governs arbitration. The Ombudsman’s Arbitration process incorporates this law to answer questions that arise in the course of the arbitration process. This law makes agreements to arbitrate enforceable in Chancery Court. This law is Chapter 57 of Title 10 of the Delaware Code. An indexed, word searchable copy of the law is available on this website on the “Important Statutes” page.

The process of arbitration often involves the following:

The complaining party file fills out a Contact/Complaint form requesting arbitration and files it with the Ombudsperson, and delivers a copy to the responding party with a copy of an Agreement to Arbitrate.

The parties must agree to arbitration by signing a written agreement form.

The parties may agree whether the arbitration will be binding or nonbinding. The written Agreement to Arbitrate should state whether arbitration is binding or nonbinding. Binding arbitration ends the dispute. Nonbinding arbitration may not.

If the parties do not agree to an arbitrator, the Ombudsperson can conduct the arbitration or designate one who will conduct the arbitration.

The arbitrator will specify a date and time for the arbitration that is convenient for both parties.

10 days before the arbitration date the complaining party will submit all pertinent records needed for decision of the case to the arbitrator and the responding party.

The Required Information is the complaint form, the pertinent governing documents of the homeowners association including the certificate of incorporation, declarations, the bylaws, and any rules adopted by the homeowners association. In addition, the complaining party must provide any other necessary evidence or documentation, including photographs, bills, or other evidence supporting the claim.

Five days before the arbitration date the responding party must deliver all pertinent records needed for decision of the case to the arbitrator and the complaining party. However, the responding party need not provide anything already supplied by the complaining party.

The parties may agree on what documents and exhibits the arbitrator will see and provide them together. They can also provide additional exhibits, so long as they provide copies to the other party in the time allowed.

On the day and time of the arbitration the parties will meet with the arbitrator in a conference room or hearing room.

The arbitrator will invite the complaining party to explain the complaint and the evidence, and explain why the arbitrator should make a decision in favor of the complaining party.

The arbitrator will then invite the responding party to state the response and explain why the arbitrator should make a decision in favor of the responding party.

The arbitrator will then ask the parties to present their witnesses and their evidence.

The arbitrator will first ask the complaining party to present evidence, or witnesses, or testify under oath to show and explain the evidence in support of the complaint.

The arbitrator may invite the responding party to ask questions of the complaining party.

The arbitrator may ask questions of the complaining party.

When the complaining party has presented all the testimony, documents and evidence in support of the complaint, and has answered all questions of the responding party or the arbitrator, the arbitrator will give the responding party an equal opportunity to present testimony, documents and evidence in support of its response.

The complaining party may ask questions directed to the responding party, and so may the arbitrator.

If the responding party raises matters that the complaining party wants to address, the arbitrator will give the complaining party an opportunity to present additional witness testimony or documentary evidence if available.

When both parties have provided all the testimony, documents and other evidence they want the arbitrator to consider, the arbitrator will give each side an opportunity to explain what the evidence shows, the governing documents and law requires, and why the arbitrator should decide in their favor. The complaining party has the first opportunity to make a closing explanation, and may reply to the responding party’s closing explanation.

The arbitrator may make a decision on the spot or may make a decision within five days and deliver a written decision to the parties within that time. The parties may agree whether they want the arbitrator to explain the decision in detail.

4. NEUTRAL ASSESSMENT

“Neutral case assessment” is a less common process by which an experienced “neutral assessor” gives a non-binding, reasoned, oral or written evaluation of a controversy, on its merits, to the parties. The neutral assessor may use mediation and/or arbitration techniques to aid the parties in reaching a settlement.

The process of neutral case assessment often involves the following:

The procedure is the same as mediation, except:

After hearing from the parties, the neutral assessor will provide a nonbinding, oral or written evaluation on the merits of each party’s position.

This may lead to meetings, mediation, arbitration, or direct negotiations leading to resolution of the dispute you.

Sometimes the neutral case assessment turns into a mediation that eventually leads to settlement.

1 Justice of the Peace Court Civil Rule 91 permits an officer of a corporation to represent the corporation in Justice of the Peace Court if the officer first files a “Certificate of Representation” with the Chief Magistrate, complies with the other provisions of Supreme Court Rule 57, and pays an annual registration fee of $20. The form and further information is available at http://courts.delaware.gov/forms/download.aspx?ID=5348